Monday, November 28, 2016

Alarm bells are ringing in, the
Western world. An intruder armed with malice is on his way to the White House.
Each of his moves draws a torrent of ill-favoured comment; every cabinet
appointment offers further proof of malign intent. Tub-thumping increases in
volume as the usurper’s enthronement draws near with media stars, academics,
journalists, many of them blessed with the gift of eloquence,belabouring
us daily with the idea that populism has triumphed over common sense and the
common good. Too many Americans have been hoodwinked by lies and demagoguery;
and for that matter too many Brits - those who voted for Brexit - have beenduped by
extravagant promises and chauvinistic appeals to self-interest. An overwhelming
question forms on every dissenting lip: what must be done to stop all this. So
runs much of the background noise.

What lies behind the shock results
of these two plebiscites? Why do firebrands like Nigel Farage, Steve Bannon,
Trump himself - or ridiculous figures like Alexander “Boris” Johnson, Daniel
Hannan and Jacob Rees-Mogg- appear to
have gained traction among people they like to call “ordinary”?

Perhaps we should remind ourselves
that demagogues find no nourishment where there is contentment, nor where, even
in the face of difficulty, the majority feel understood and respected by their
representatives. They thrive in fields left fallow and neglected by government,
where the privileged few wallow in superfluous wealth while the many must live
where hope is in short supply, and insecurity and privation have become the
wages of democracy.

People who voted for Trump and
Brexit are not simple-minded malcontents prey to any rabble-rouser with a
microphone. They have simply reacted to economic injustice, lack of adequate
status, a sense of injury and indignation that those in whom they have
entrusted their welfare and that of their children have ignored and betrayed
them.Perpetrators of that betrayal have
been successive governments operating in cahoots with the captains of finance
and industry. These are the true inmates of Hillary Clinton’s basket of
deplorables,of which she, too, is a
member.

Deepening inequality is perhaps the
clearest evidence of the social divisions that have produced Trump andBrexitin their respective domains. In his final state of the union address, President Obama lamented the rise
of inequality and the desirability of an“…economy that works for everyone.” - words that Theresa May echoed from
the steps of No.10 in her inaugural remarks to the nation as UK Prime Minister.
Obama recently told a Greek audience that inequality is the greatest threat to democracy, a Damascene revelation that he
took two full presidential terms to articulate and then only in the wake of
Donald Trump’s
electoral victory.
Laudable sentiments from both leaders no doubt, but they beg the question of
why, during Obama’s eight years in the White House and May’s six years in
Cameron’s cabinet, they presided over an increase in what they now pretend to
deplore.

Nobel prize-winner Joseph Stiglitz noted in a recent report that governments
are perfectly capable of counteracting the growth of inequality - and its
handmaiden poverty - if they will; but their policies have actively promoted
the opposite - a conclusion supported by Professor John Weeks’ recent piece in Open Democracy. Whether by
neglect, design or sheer incompetence they have fostered unfairness,
deprivation, and misery - and where the old dispensation survives, as in the
UK, they plan to continue doing so.Trump suggested during his campaign that the
US electoral system was rigged; but what has truly been rigged is an economic system geared to rewarding the already
wealthy and making the poor pay for downturns.

Inequality and
marginalisation are not the only beefs against the political class. On both
sides of the Atlantic, voters are repelled by State activities that are not
just unpopular but repeatedly show up decision-making incompetence and a lack
of moral judgment. Here are some:

-Adetermination to commercialise public life
and to submit social welfare to the vagaries of competition;

-Genuflection
to big business and finance - with political office functioning as a route to
personal enrichment;

-Military
interventionism - led by the US but with the UK as lieutenant - in which modern
weaponry is deployed against stricken countries, and innocent victims are
anodised as “collateral damage”.

-Foreign
policies towards countries such as Afghanistan, Syria, Libya and Ukraine that
are marked by ignorance, dithering and bewilderment;

-In
the UK, a government and opposition embarrassingly lost in a fog of confusion
on Brexit; in the US, a similar confusion about international trade deals that
effectively leaves big business and labour at loggerheads;

-A
potentially dangerous cold war with Russia, and possibly with China in the
South China Sea;

-Refusal
to face up to the challenge of climate change and protectionism towards
industries that damage the environment;

-Wavering
incoherence towards the growing problem of human migration;

-Persistent,
bare-faced lying to the electorate - nowhere more evident than in the Brexit
referendum and the 2016 US election campaigns.

Plenty of flak is being hurled in
Trump’s direction - but so far, at least, his sins are largely of word rather
than deed. Those of the political class, by contrast, are part of our lived
experience and they have been demonstrably unpleasant, disabling, divisive,
careless of the welfare of citizens in their own and in other countries, and in
some cases outright dangerous.

Born into an impoverished
working-class family,I am a life-long
left-winger. My education I owe entirely to the UK welfare state. I am
reasonably well-read in the literature of the left and have more than dipped
into that of the right. I am an unabashed admirer of the brilliant figures who
spearheaded US independence from Great Britain and who wrote the US
constitution. My political heroes include Simón Bolívar, Thomas Jefferson, John
Adams, Alexander Hamilton,Clement
Attlee and, of course, Fidel.

During the US election, I asked
myself how I would vote if I were a citizen of that country. I thought of
Trump’s insulting outbursts against Mexicans, against Muslims andagainst
women, his vile mimicry of a disabled person, his airy dismissal of climate
change, his egomania and brittleness. The foulness of his campaign,
however,could not erase in my mind the
callous and venal record of the Obama years. Nor as a lifelong student of Latin
America, could I overlook the outgoing administration’s incessant interference in that region, not least Hillary
Clinton’s support for the 2009 coup in Honduras that
ousted President Zelaya, and the absurd designation of Venezuela as an “extraordinary
threat to the national security and foreign policy of the United States.”My answer, disagreeable to my own conscience,
is that I would probably abstain, but that if I had decided to vote, it might
well have been for Trump if only because he, at least, had not yet betrayed the
people and thus offered a smidgin of hope that he might modify his
extreme opinions under the constraints of office. Clinton, on the other hand,
offered only more of the same and thus no hope at all. Repentance would
assuredly have followed, no matter which of the three alternatives I chose. If
I had put my cross against Trump’s name, my subsequent sense of shame would
probably have discouraged me from admitting it - even more so after his
ignorant and menacing response to the death of Fidel Castro. There
were no good options. France’s forthcoming presidential election may present
French citizens, those on the left at any rate, with a similar dilemma next
year. Meanwhile, the UK is governed by a Prime Minister the people haven’t
elected, running a government programme for which no one voted, and who prefers
the royal prerogative to parliamentary sovereignty.

Monday, November 14, 2016

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From time to time throughout history,
prophecies of doom have warned us of the approaching apocalypse. Most religions
have an end-of days component in which the world as we know it will be swept
away either to be reborn with suitable moral improvements or, as in the
Theravada branch of Buddhism, to be finally destroyed in a conflagration. Some
bold prophets have even ventured to predict the date of our extinction. Pope
Sylvester II assured the faithful that they and everyone else would expire on
January 1st of theyear 1000; while one
of his successors, the aptly-named Innocent III settled on 1284. Martin Luther,
Christopher Columbus, Nostradamus (Michel de Nostredame), and Isaac Newton, are
among the better-known apocalyptic sooth-sayers, Jim Jones and Charles Manson among the
most sinister, while New England Puritan minister Cotton
Mather and Herbert Armstrong (founder of
the Worldwide Church of God) figure among the most indefatigable - happy to
revise their predictions when their chosen extinction date passes without
incident and they findthemselves still
alive on the following morning. A modern variation on the theme was the
widely-believed prognosis of computer meltdown on January 1st 2000; and we have
been assured by a newspaper as respectable as The Guardian that interstellar
detritus will soon put paid to us, although
the most recent extinction attributable to outer space is that of an Egyptian
dog in 1912.

Latest
in the long human saga of dire forebodings is the electoral victory of Donald
Trump on November 8th 2016 - an event that has unleashed a torrent of alarmist
rhetoric from prominent members of the commentariat. Historian and media star
Simon Schama, an inveterate anti-Trump tweeter, angrily told a BBC
Newsnight audience that Trump’s election was akin to Adolf Hitler’s rise to
power in the 1930s. On the BBC’s Question Time on November 11, Professor Sarah Churchwell, a US citizen, was barely able to
contain her fury at the prospect of Trump becoming president and confessed that
she no longer understood her own country.Senator Joe Manchin is currently squabbling
with fellow Democrat Senator Harry Reid over the propriety of hurling
expletives at the president elect. The New York Times, having spent uncountable
column inches demonising the Republican candidate, is suddenly fearful of
losing its subscribers and issues an apology through gritted
teeth for having persistently denigrated the new leader prior to the
election.Protests erupt in cities all over the United States
at the news of Trump’s victory. Students at Cornell University stage
a “cry-in”, though they are consoled in their
grief by supplies of freshly-brewed coffee courtesy of a sympathetic barista.
More energetically, but with an equal display of cerebral distinction, Columbia
students march around the campus screaming “Fuck Donald
Trump”.

Not
to be outdone, newspaper columnists in the UK are fulsome in their expressions
of outrage that a “racist misogynist” has won the White House.“Don’t for one moment let the horror of the
Trump election become normal”, urges Polly
Toynbee of The Guardian, while fellow journalist Owen Jones tweets that “55% of
white women voting for Trump is one of the most horrifying statistics I’ve ever
seen”.The Mirror goes even further with
a headline predicting the end of civilisation.Canada’s immigration web site crashes on US
election night, overloaded with inquiries from Americans wanting to escape
Trump’s America and presumably believing that terminal implosion will occur
only south of the 49th parallel.

Adopting
a slightly different but no less partisan approach, a furious Glen Greenwald turns his ire not on the
electorates that voted for Trump and also for Brexit, but on the political
class that has failed to concern itself with the welfare of citizens whilewatching
complacently as “…elite circles gorged themselves on globalism, free trade,
Wall Street casino gambling, and endless wars”.As an
exercise in angry polemic, Greenwald’s piece is as good as it gets.

What
is meantby the political class?Essentially, the phrase refers to an inner
circle of elected representatives and their advisers who belong to political
parties that have a proven ability to achieve power. In the United States there
have only ever been two such parties; and despite recent fragmentation, the UK
currently still has two - although some might contend that the number should
now more realistically be one and a half.

Serious
attempts at the US presidency have required adherence either to the Democrats
or the Republicans. From time to time, independents like Ross Perot and Ralph Nader have thrown
their hat into the ring, as did minor-party candidates Gary Johnson and Jill
Stein this year; but to no avail. If a fresh face is to appear, it must do so
from within the main party stockades. For the Democrats, Obama managed it in
2008 and Bernie Sanders, a self-proclaimed socialist, nearly did so in
2016.In their different ways, however,
both have ended up toeing the party line.

From
the outset of his presidency, Obama has arguably remained on the conservative
wing of the Democratic Party. He selected his first cabinet from the
political-class rule-book: several Clinton stalwarts - including Hillary as
Secretary of State, a sprinkling of Republicans including Robert Gates as
Secretary of Defense, and bank executive Timothy Geithner as Treasury Secretary
when the choice might have fallen on more progressive figures such as Nobel
prize-winners Paul Krugman and Joseph Steiglitz either of whom would have
brought added distinction to the cabinet table.

In
the end, despite his high intelligence and winning personality, Obama has had
little or nothing to offer the blue-collar Americans who voted him in. Rust
belt states have remained rusty, wealth and income inequality have continued to increase.
Foreign policy, meanwhile, has continued in an expensive and vainglorious
mixture of confusion and belligerence: the failed “surge” in
Afghanistan, aggressive incoherence in the Middle East, bewilderment on Russia
and Ukraine, frustration in trade negotiations with the EU. Obama’s conservatism
is nowhere more evident than in his administration’s coolness towards left-wing
governments in Latin America where policy has ranged from meddling in Venezuela, sanctioning a coup in Honduras,
quietly applauding the impeachment on false charges of
Paraguay’s left-wing President Lugo, and showing approval for Argentina’s new
right-wing government with a presidential visit.

Even
a cursory glance at Obama’s record demonstrates why, in the world of politics,
appearances often prove deceptive, hopes turn out to be illusory, and
progressive rhetoric ends up sounding like vacuous sloganeering. All parties
claim to be for the people - the right a little less so, the left a little more
so. But in recent years, they have all occupied the same policy landscape, the
one laid out by Reagan and Thatcher. They are neoliberals to a man and woman.

Party
nonconformists, meanwhile, are usually either squeezed out like Bernie Sanders,
or struggle to achieve credibility like Jeremy Corbyn. Neither of these has
succeeded thus far in engaging the people they claim to be addressing. During
the primaries, Sanders had virtually no traction among African Americans and
very little among Hispanics; Corbyn has scant following in the deprived areas
of the north of England and the Midlands, and none at all in Scotland. Sanders
in the end compromised his principles by supporting Hillary for the sake of the
party. Corbyn and his colleagues fall back on the vocabulary and thinking of
the 1970s when unions were strong, manufacturing still a major component of the
UK economy, and the financial sector didn’t rule the roost. The Democratic
Party reined in Sanders, and though the electoral result may unleash him again,
time is not on his side. Corbyn’s vocabulary remains firm, but thus far he enjoys
limited credibility among those he most needs to convince. Sanders’ followers
are largely young, idealistic students and middle-class intellectuals, and so
too are Corbyn’s. Both are fluent in the requisite progressive vocabulary and
they doubtless use it honestly; but they mainly reach those who think they know
the answers to the problems of the poor, the unemployed, and the disadvantaged,
among whom they themselves were never numbered.

Enter
Trump and Farage from the outfield - the true disrupters of convention. Both
have picked up on widespread public disaffection and moulded their language to
suit - Trump, one suspects by instinct and Farage by calculation, though the
result is the same.It is Trump, of
course, who matters; and what is interesting and instructive about some of his
prescriptions for addressing blue-collar anger in particular is that they are
fundamentally left-of-centre. Whatever one may think of his xenophobic
outbursts, his crude sexual boasting, his transparent vulgarity, these may fade
into insignificance beside his stated desire to revamp America’s economic
profile and the role of the state - ambitions, incidentally, that could put him
at loggerheads with a Republican congress. Three policies, in particular, might
prove ground-breaking.

First,
the hostility to free trade deals - including the NAFTA (North American Free
Trade Agreement). Trump has understood than free trade is never free. As soon
as the ink has dried on the parchment, the signatories to trade deals find
themselves obliged to open their borders to each other’s exports regardless of
the interests of employees, communities, and even whole regions and sectors of
activity. Tariffs reduce or disappear, but competition does not. Companies free
to operate within a free trade area can move to where costs are lower - not
only labour costs but also those related to energy prices, taxes, exchange
rates, environmental standards and so on. Rust, decay and unemployment in
regions thereby deprived of economic activity are among the less happy
consequences, accompanied all too often by neglect from officialdom.

Where
formal trade deals do not exist, companies may also shift production to
lower-cost countries, but governments at least remain free to implement
countervailing policies without being dragged before a tribunal. Free trade
deals, by contrast, bypass democratic accountability as the Canadian government
learned when it tried to ban the
importation of a toxic fuel additive from the United States.They are set in
stone. They oblige the signatory countries to submit to their wording
regardless of changing economic conditions. They can and sometimes do prevent
governments from acting in the national interest. By minimising production
costs - but not necessarily prices and certainly not profits - they also help
to concentrate wealth in the hands of capitalists and senior executives, and
thereby to increase inequality. Trump’s hostility to trade deals may or may not
prove advantageous, but it is far from indefensible.

Second,
Trump’s team is beginning to outline a
tax plan that is again more coherent than may first
appear; and though it may look thoroughly right-wing, the corporate tax element
has more to do with common sense than ideology. At present the US has the
OECD’s highest corporate tax rate,
One consequence is that instead of repatriating their overseas profits, US
companies operate abroad from low-tax jurisdictions like Ireland (tax rate
12.5%) and stash much of the rest in tax havens like Bermuda
and Cayman Islands. Lowering the US corporate tax rate could be a means of
inducing US corporations “back home” - bringing jobs andinvestment with them as well as revenue to
the government.

Third,
Trump is proposing major investment in infrastructure. Unlike many politicians,
he understands the difference between capitaland operating expenditure; and he knows that investment by the state in,
for example, highways, airports, educational facilities etc. not only increases
employment, it also has the long-term effect of reducing operating costs.
Compare the UK’s so-called PFI initiative by which clever Labour and Tory
chancellors sought to save public money by getting the private sector to
finance capital projects. PFI’s signal achievement has not been to save public
money, but to put hospitals into the red and excessive profits into the hands
of corporations, while adding to the deficit.

In
summary,some of Trump’s most
significant economic policy proposals are ones that would not or should not
seem outlandish if they were to come from Sanders or Corbyn. Much left-wing
commentary would have us believe that Trump’s elevation signals the end of
days. But the poor, the unemployed, and those many who feel marginalised by the
relentless march of neoliberalism may beg to differ. Even if voters find some
of Trump’s opinions distasteful, when it comes to putting bread on the table,
they will choose to feed the kids. While the media are fretting about the
Mexican wall and the deportation of illegal immigrants - policies already
softening and destined in time to become footnotes - they are forgetting Bill
Clinton’s celebrated aphorism: “It’s
the economy, stupid!”.

Saturday, April 23, 2016

A common
complaint about the referendum debate from so-called “ordinary voters” is that
while soothsayers and their opinions are many, facts are depressingly thin on
the ground. In default of facts, the public is bombarded with unverifiable
assertions whose reliability tends to be in inverse proportion to the
confidence with which they are expressed. Some of the most forceful of these
are manifestly untrue and routinely take the form of histrionic tantrums and
insults - humorous and otherwise - directed at opponents. Bombast and fury,
notably from advocates of the ‘Leave’ campaign, occupy the sound waves and
headlines, elbowing out rational argument and well-researched analysis.Boris Johnson’s scatological quip about the government’s
referendum leaflet, for example, tells us less about the quality of the
document than about the puerile humour of a man who, by some accounts, is using ‘Vote Leave’ as
part of a plan to replace the current occupant of Number 10. If he succeeds, he
will be the first overt buffoon ever to lead the country. Ambition, cold
calculation of personal or corporate advantage seem more present among the
‘Outers’ than concern for the country’s future.

By contrast,
the ‘Remain’
campaign seems oddly low-key - probably because it is difficult, perhaps
impossible, to be passionately angry about advocating “no change”. Yeats’ unforgettable
lines come to mind:

“the best lack all
conviction, while the worst

Are full of passionate
intensity.”

Not that we
should in any sense admit the current UK prime minister into the ranks of “the
best”. He is, as Anthony Barnett describes in his excellent piece, an inveterate
dissembler, a callow purveyor of untruths. But with respect to the referendum,
the arguments for ‘Remain’ put forward by Cameron’s team - and by Corbyn’s for
that matter - give the impression at least of appealing to our intellect rather
than to crude emotion.

What is
lacking so far in the ‘Remain’ camp is any sign that the manifest absurdities
ofprominent ‘Out’ campaigners like
Johnson are being subjected to scrutiny. So here is a taste of what such
scrutiny might reveal.

Among
Johnson’s recent pronouncements is a claim that President Obama is a hypocrite for recommending that the
UK remain in the EU (with a concomitant loss of sovereignty) when the US wouldn’t
dream of sharing its own sovereignty with any other nation. That Johnson feels
free to voice such an offensive insult suggests that he will say anything to
advance his case regardless of whether it is fair, true, or an appropriate way
of referring to a foreign head of state prior to a visit to this country.This is embarrassing enough; but even worse
is that his remark is patently untrue.When, in 1994, the US government entered into the North American Free
Trade Agreement (NAFTA), it surrendered a substantial degree of
autonomy, as did the co-signatories Canada and Mexico. A complex and
substantial range of NAFTA rules and regulations governs trade and investment
between the three countries, a fact that has given rise to unease in some quarters at the
loss of sovereignty supposedly involved.

The idea
that trading arrangements in the modern world are free of political
consequences is, to borrow one of Johnson’s favoured epithets, piffle. All such
agreements involve releasing control over some aspects of national economic
life in return for expected advantages. Whether these involve a fundamental
loss of sovereignty, rather than a reversible one, is another matter. ‘Leave’
campaigners are fond of pointing out with declamatory relish the percentage of
UK laws now made in Brussels (a Farage speciality), and that various desirable
initiatives of the UK government are stymied by EU regulation. What they
overlook is that the UK parliament remains sovereign in law and that while, on
joining the European Community (as it then was) in 1972, it agreed to acknowledge the
supremacy of European law, it could not and cannot bind its successors. Like
other EU members, the UK can repudiate existing EU legislation or refuse to
sign up to new legislation with which it disagrees. As I have signalled in a previous piece,
other EU members have a decidedly pick-and-choose attitude towards EU
legislation; and the idea that the UK lacks this element of discretion is, to
borrow once more from Johnson, bunkum.

One of the ‘Leave’
campaign’s most outspoken storm-troopers is Daniel Hannan who, despite his distaste
for the EU, is an elected MEP with a right therefore to enjoy the associated
perquisites. A curious reversal of Groucho Marx’s refusal to join a club
willing to accept him is Hannan’s adherence to a club that he evidently feels
should have no members at all - not UK ones at any rate.

As readers
wearing armour plate can verify for themselves, Hannan
has assembledwhat he doubtless
considers to be an imposing armoury of munitions against ‘Remainers’ and
everything they stand for; and he expresses himself with the frightening
self-confidence of someone for whom doubt is an alien concept, and facts are
discardable or subject to revision if they fail to correspond with his
vision.

An anti-EU article by Hannan in The Spectator offers a summary of his views. He begins by
telling readers that: “… the migration and euro crises are deepening, and
Britain is being dragged into them.”As an exercise in misrepresentation this could hardly be bettered. Given
that the UK has not adopted the common currency, the euro troubles to which
Hannan refers can only affect the UK indirectly through commerce; and since no
one is advocating a cessation of trade with the EU, the issue is irrelevant to
the case for or against Brexit. More sinister is Hannan’s reference to
migration because it directs our attention, as he doubtless intends, to the
refugees flooding into southern Europe from various conflicts in the Middle
East, North Africa and elsewhere. Their numbers certainly qualify the
phenomenon as a crisis, but it is not one created by the EU.
If responsibility lies anywhere beyond the conflicting parties themselves, it
is with foreign powers that have interpreted their role on the world’s stage as
a right to meddle, to bomb, to invade, and to sell arms to those regions, with
scant regard for the consequences.

Hannan’s
migration comment slides neatly over the UK’s own role in fomenting the
migration crisis: the wreckage of Iraq that gave rise to ISIS, a dithering intervention in Syria, military
adventurism in Afghanistan, Cameron’s pathetic failure to keep his promises on
Libya, and so on. The inference is that we can and should close our eyesand borders to the refugee problems facing
Greece and Italy, and instead pursue a policy like those of Hungary, Macedonia
and now Austria aimed at keeping out
unwelcome hordes.If Europe is
descending into what may be the kind nationalism that we saw prior to WWII,
then the EU project may come to an end anyway - not for the reasons cited by
Johnson and Hannan, but because of a dispiriting failure to exercise the common
solidarity that, in a globalised and increasingly volatile world, is critical
to our well-being.

What of the
accusation that Brussels obliges the UK (and presumably all the other members)
to accept unwelcome regulation? Here is Hannan comparing Swiss “liberty” with
EU regulatory oppression:

Describing the EU as “malicious”, and its activities as a
“menace” to London anthropomorphises it as a villainous creature intent on
doing us down. Since Hannan offers a list of malign EU initiatives, let’s take
a look at them. The Alternative Investment Fund Managers Directive (AIFMD)
represents an attempt to limit systemic risk in the “alternatives investment”
market, such as hedge funds and derivatives, that are widely considered to have
contributed to the global downturn of 2008. Despite coming into force in 2011,
only a handful of EU members have bothered to ratify it - the UK being one of
them. No one forced the hand of government to sign up, and given the havoc
wreaked on the world economy by out-of-control financial speculation, the
menace would seemto be not in Brussels
but in the minds of those who wish to allow fund managers to carry on as
before. One can only wonder at the reason why Hannan thinks the AIFMD threatens
our well-being.

The
short-selling ban is a piece of legislation designed - like the AIFMD -to foster financial stability in the light of lessons
learned in the aftermath of the 2008 crisis, and it contains exemptions available
to all member states; while the cap on (bankers’) bonuses - at an almost
grotesque maximum of 200% of pay - seems so absurdly innocuous that to cite it
as an example of EU maliciousness is either perverse or simply weird. Finally
the Financial Transactions Tax is an initiative of the European Commission in
which fully half of the EU members - including the UK - have opted not to
participate.

In summary,
Hannan’s terrifying examples of EU malevolence turn out to be neither
terrifying, foolish, oppressive, malevolent, or even obligatory.

Turning to
the cost of EU membership, Hannan refers to an obscure paper by “ProfessorHerman Matthijs of the Free University of
Brussels” in which figures are given for national contributions to the EU
budget. Hannan’s complaint is that Iceland, Norway and Switzerland, which are
non-EU members, only contribute €50, €107 and €68 respectively per capita,
while the UK has to pay €229. What he fails to point out, either because the
message is inconvenient or because of his own ignorance (he incorrectly
describes Professor Matthijs as the only available source) is that the UK’s net per capita contribution after rebate
and financial support deductions is not €229 but €118, equivalent to 2.5 pence
per day.By contrast, France pays €176
per capita, Germany €270, Belgium €302, and Netherlands a whopping €504 [1]. Of
the twelve EU countries that make positive net contributions to the EU, only
Ireland, Spain and Luxembourg pay less per capita than the UK.

The UK’s position as a net contributor to the
EU budget roughly corresponds to the country’s relative wealth per capita. This
may come as a shock to those who have become accustomed to hearing - notably
from ‘Leave’ campaigners - that the UK economy is the fifth largest in the
world. Absolute size is far from being a reflection of economic success, and in
Europe, the UK lies in tenth position in terms of GDP per capita behind
Austria, Belgium, Denmark, Finland, Germany, Ireland, Luxembourg, Netherlands,
and Sweden. Where the country stands proud is not in relative wealth but in
achieving the rank of Europe’s most unequal country.

Hannan’s
peroration in his Spectator article borders on the delusional. In scratching
around for evidence of how we could happily go it alone, he quotes the
following from disgraced Icelandic Prime Minister Sigmundur
Davíð Gunnlaugsson:

“Iceland is much
better off outside the EU. Unemployment is minimal, purchasing power has never
been higher, and we have control over our own legal framework, currency and
natural resources.”

Some might
consider this comment to be a damned cheek as well as misleading. Iceland is
the country that had to be bailed out by EU countries (plus
Norway) when it went bust; and it adheres to virtually the entire EU framework - including the “Schengen” open-border arrangement
from which the UK is exempt.

On the BBC’s
Today Programme, MP John Redwood, another
‘Leave” proponent, saw fit to trash the recentTreasury analysis of the consequences of
Brexit, before confidently affirming that “we will be better off out”.He then excused the ‘Leave’ campaign’s lack
of supporting data for this view with a stunningpiece of rhetorical self-contradiction: “Who
knows what’s going to happen?”; a
question to which presumably the only possible reply is that of Voltaire’s
potty anti-hero Dr Pangloss: “All is for the best…”

Rhetoric
rather than information is the ‘Leave’ campaign’s main weapon; and its case
rests largely on arousing sentiments of nationalism, on appeals to emotion and
to certitudes whose validity on inspection seeps away like sand through a sieve.

Writing in
1934, Stefan Zweig presciently identified the difficulty as well as the
fundamentalnobility of the European
ideal:

“The
European idea is is not a primary emotion like patriotism or ethnicity;….it is
not the product of spontaneous fervour, but the slow-ripened fruit of a more
elevated way of thinking….the egoism of nationalism will always cut more keenly
through to the average man than the altruism of the European ideal because it
is always easier to be aware…..of one’s own kind than of one’s neighbour….If we
cannot arouse enthusiasm for our idea (of European unity) in the heart and
blood of our peoples, our effort will be in vain, for never in the history of
change has the intellectual sphere and that of patient reflection ever
triumphed.” [2]

His warning
went unheeded, with all the ensuing consequences. Former Greek finance
minister, Yanis Varoufakis, speaks in similar terms in a recent interview with Owen Jones of The
Guardian.His message: we need to bond
across borders if we are to avoid a descent into xenophobia, racism and
ultra-nationalism.

Perhaps, in
the end, we just need to glance back at the last century, and learn.

Great Britain and
Ireland are the only members of the European Union with a legal system based on
common law. Civil law prevails in all the other member states. These two
traditions are the basis of quite different ways of approaching EU regulation;
and they lie at the heart of some of the most critical misunderstandings
between - in particular - the UK and the EU. They alsogo some way to explaining why the UK seems
constantly to struggle with EU bureaucratic rigidity and with what eurosceptics
perceive as undemocratic regulatory incontinence.

Custom and equity are
the two guiding principles of common law: precedent tempered by a sense of what
is “just”, so that while past judgements make up the scripture, they don’t
necessarily override fairness.

Civil law, on the other
hand, owes its origin first to ancient Roman law - developed under the emperor
Justinian - but also somewhat to the canon law of the Catholic Church. These
were the twin influences that fed, under Napoleon,into what became known as the Napoleonic Code which was subsequently adopted in
most of Europe, with variations, updates and rewrites appropriate to each
nation. For our purposes, what is important in the Napoleonic tradition is that
the law is codified in the form of statutes. Under civil law, a judge is
supposed to be able to reach a decision by applying logical deduction to the
written code. If this proves impossible, it is theoretically either the fault
of the judge for not understanding the law properly, or of the legislature for
failing to keep thecode up to date.

In common law
countries, courts interpret the law, while in civil law countries judges follow
and apply it. Common law plays out as a gladiatorial contest between opponents;
while civil law works more as an inquisition in which the judge’s role is to
expose the truth. What this means in practice is that the British tend to take
the law literally, probably because its cultural basis is consent - a consent
epitomised with respect to new legislation through acts of parliament but where
judicial interpretation and precedent still hold sway. By contrast, those who
live under forms of civil law work under what distinguished lawyers andcodifiers have written down. The Napoleonic
Code (1804) was drawn up by a commission of four eminent jurists. Hence why
Europeans tend to be more comfortable than the British with laws “made in
Brussels”. Brits are simply not used to legislation being drafted by unelected
bureaucrats or specialists; and some therefore
conclude with sniffy condescension that while “we” in the UK
are wedded to democracy those Europeans must necessarily be less so.Eurosceptics are doubtless not alone in
looking askance at the proliferation and seeming intractability of EU “rules”.
and in wondering why the whole of Europe has not risen in arms against the
Brussels bureaucrats.

One answer lies in the
factthat the primacy of “the book” in
the European legal tradition has given rise to a long-established custom of
working through the interstices of the legislative framework whenever it seems
possible and convenient to do so;and
where civil legislation is concerned, legitimate reasons may sometimes be found
for simply ignoring the letter of the law in favour of a higher purpose.

A few words of biblical
context may help us understand the thinking. When, in the Old Testament, the
Israelites demanded “like other nations” to have an earthly king as well as a
heavenly one”, the prophet Samuel acceded to the request on the Lord’s advice,
but only after warning the people that a king would use his power to bend them
to his will. (Samuel Bk1, ch. 8).Thus began a dichotomy between human and
divine authority that led along one path to claims that monarchs and spiritual
leaders were divinely anointed, and along another to what became known as
scholasticism, and subsequently under Jesuit influence as casuistry. The latter
are forms of argumentation and abstract reasoning aimed at achieving a desired
conclusion without trespassing on received dogma. Even today, Roman Catholics
are used to discussing
how and under what circumstances it is permissible to disobey the law. We are in the realm here of a
cultural inheritance whose roots lie deep in the past.

Different attitudes
towards the law are fundamental to understanding why Europeans states seem able
to handle EUlegislation even when it
appears not to be in the national interest, while the UK - government as well
as eurosceptics - claims to be powerless against its strictures.While Brits tend to think that EU legislation
is set in stone - however “undemocratic” it may seem - Europeans are used to
working out ways to circumvent it or, at any rate, to avoid some of its
unwelcome consequences.A Spanish phrase
summarises the approach: “La ley se acata pero no se cumple.” - the law
is respected but not (necessarily) obeyed. This particular formulation arises
from the Spanish colonial period when edicts from Madrid were dutifully
acknowledged in the distant colonies of Latin America and thereafter ignored as
“impractical”; but it is an inbuilt cultural characteristic of countries that
have inherited the Catholic-Napoleonic tradition.

How are these
differences between the UK and the EU manifested? Let us start with the issue
of nationalised industries. Maintenance of a level playing field between member
states in matters of commerce is a prime responsibility of the European
Commission(EC) which is supposed to
have wide powers
of regulation.
According to
the EC,
long-term state holdings in corporations are a form of state aid and therefore
constitute unfair competition.Tories famously eschew nationalisation on
ideological grounds, but both UKIPand strongLabour voices concur that the EU won’t
allow it anyway. An illustration of the earnestness with which EU state aid
regulations are treated as gospel is the government’s
own manual
on the subject published for the enlightenment of officials (downloadable, and
excellent nourishment for masochists). For readers with less tolerant digestive
tracts, an EC
powerpoint
focused on the steel industry provides the essentials of what we are supposed
to believe. Clearly stated in the legislation is a prohibition on state aid for
companies in trouble or for disadvantaged regions.That would seem to put paid to Redcar, Port
Talbot and the entire British steel industry. Too bad that Chinese steel, under
the protection and sustenance of the Chinese state, is being dumped on the
European market at knock-down prices! Too bad for the UK that is because, as
has not escaped
everyone’s attention, so many exceptions to the state-aid prohibition exist that there’s
room enough for tanks to trundle through the legislative gate without touching
the sides, Belgian, French, German and Italian tanks among them.

Germany’s way with the
rules is notably instructive. Astudy conducted by the TUC in 2012 and
which formed part of a submission to a government committee states that “….over
the period 2010-2012, German industries, including energy intensive industries,
benefitted from a range of reliefs from duties, levies and taxes worth EUR 26
billion, or some EUR 8billion
a year. These reliefs are set to continue for the longer term”. Moreover,
“…they cover a wide range of measures (including) grids, power plants, energy
efficiency, renewables, energy research and compensatory arrangements for
businesses competing at the international level "(my italics). Nor is energy the sole framework for direct
state aid to industry. Buried a little shyly in a long piece in The Economist on German manufacturing is an
admission that the state doles out cash in support of industries that it thinks
are important areas of growth, and offers“extensive” research facilitiesto small
and medium-sized firms when they need help.

All that seems to be required for
these subsidies to pass ‘go’ is a careful reading of the regulations allied to
a determination to ensure that these don’t interfere with German economic
interests. Even when Germany is caught in a flagrante
breach of the rules, as seems to have occurred with the subsidisation of Deutsche
Post,it somehow manages to avoid
embarrassment or even bothering to respond.Thanks to the Centre for
Policy Studies,we now know about Germany’s recent gas pipeline
deal with Russia - a developmententirely
contrary to EU energy policy but which the EC will doubtless be unable to
prevent. Germany is, after all, the EU’s biggest beast and, like the ghost in
Hamlet, “is as the air invulnerable and the EC’s vain blows malicious mockery.”

Perhaps the most egregious
German subsidy of all concerns exports to the rest of the EU - and, in
particular, to the countries of southern Europe. Here Germany takes sublime
advantage of the European Central Bank’s inter-bank payments settlement system
known as TARGET2. Every time money flows from the banks of one euro member
country to the banks of another, it does so through the TARGET2 system which works as follows. Let’s say a
Greek dealer orders a consignment of luxury cars from Germany. The German
exporter duly dispatches the vehicles while the Greek importer instructs her
local bankto arrange for payment. This is effected via the Greek Central Bank,
which thenregisters a TARGET2 credit in its accounts in favour of the German
Bundesbank (central bank),after which the latter in turn credits the amount to the bank of the
German exporter.Because the deal is in
euros no foreign exchange is applicable, and no money needs to change hands
because these apparent financial transactions are just computerised entries.

If, for example,the funds are lacking
in Greece to pay the debt (which has been the case), then the Bundesbank simply
registers a claim against the Greek Central Bank.

At the end of February
2016, the Bundesbank’s TARGET2 claims amounted to EUR 605
billion.
Prior to the onset of the financial crisis in 2008, the balance was EUR 71
billion,
while at year end 2006 it was only EUR 5 billion. In other words, as Greece and
other southern European countriesdescended into critical levels of debt,the Bundesbank’s TARGET2 balances
swelled in parallel. TARGET2 credits have enabled the Bundesbank to finance and therefore subsidise Germanexports to cash-strapped
Eurozone countries - albeit at some risk to the German taxpayer because if any
of these countries had been “allowed” to default, German citizens would have
had to foot the bill. Hence the German pressure on Greece to knuckle down to
austerity and to flog off state assets.

Admirers of German
efficiency and apparent economic success tend to confuse the country’s
reputation for meticulousness with straightforward dealing. Meticulous the
Germans certainly are, and fine engineers too; but as the recent Volkswagen
scandal has amply demonstrated, straightforwardness is not a characteristic to
which they can fairly lay claim. An objective observer might be tempted to
conclude that the German government favours the national interest above the
interests of her European partners; but then it is to the German electorate not
the EU that Mrs Merkel must answer.

France differs somewhat
from Germany in her approach to dealing with EU regulations,though the objectives are similar. French
nationalism is more overt, and direct state participation in industry more
significant. The country maintains a large state sector, and readily finds

reasons for blocking foreign ownership of French businesses, not simply
those one might expect such as defence or “foundation” industries, but any firm
considered to be a quintessential representative of the nation. When
yoghurt-maker Danone became a takeover target, the government took up arms to defend what the French Prime Minister referred to at the time as “one of our
industrial treasures”; a striking contrastwith the UK government’s response to the takeover of Cadbury. But then
France offers scant respect for “prohibitions” that are deemed not to be in the
national interest, the attitude being that if an initiative is not allowed,
then it will be redefined as “strategic” and therefore allowable after all, or
simply met with a ministerial
shrug of the shoulders and a sotto voce “on s’en fout” (we don’t give a damn). Here we
see casuistry at work - if necessary with a defiant twist - in modern Europe. France has adopted a fiercely nationalistic policy of industrial development and seems
unlikely to change course any time soon.

Whether protectionism
is good or bad is not the subject of this essay. What may be of concern, however,
are the possible long-term consequences of industrial laissez-faire - or an
over-zealous adherence to EU state-aid rules. One consequence is suggested by
the annual Thompson-Reuters report on the
top 100 global innovators, the 2015 edition of which has Japanese and US companies leading the
way with 40 and 35 respectively, while France has ten and Germany four.Among the newcomers are Korea with three and
Taiwan with one.And the UK? None.In the short-term we may not notice much
effect on our standard-of-living of what appears to be a lacklustre level of innovation,
although the UK’s stubbornly
low productivity may well be one; but who knows if in the medium-term we will not end up
as hewers of wood and drawers of water in an economic universe controlled
elsewhere? The UK’s finance sector currently feeds the government with tax
revenues, and thelow-paid service sector feeds the employment
statistics; but they do little to foster the development of a vibrant, creative
nation.

Ideology, of course,
plays a role in the UK’s policy - notable since Thatcher - of delivering the
country’s industrial welfare to the vagaries of the market.Ironically, the United States, considered by
some to be the model of free-market thinking, is far less
hesitant
than the UK about protecting strategic industries. But regardless of the
ideology at play, successive UK governments - and the current one not
least- have a history of bowing to EU
regulations more punctiliously than any other major country.

Nothing perhaps more
clearly demonstrates the weirdness of the British attitude to EU regulation
than the Hinkley Point C nuclear power saga.In 2014, the EC graciously gave the UK permission to proceed with
Hinckley Point despite serious misgivings about pricing and loan guarantees
that bear a striking resemblance tostate subsidies. Moreover, the proposed lead builder and operator of Hinckley Point
is to be none other than EDF - a French state-owned utility company. Both the
Austrians and the Germans have objected to what looks like a stitch-up, and in July 2015
they filed a lawsuit against the EC for its decision to override EU competition law against
state aid. In March this year, the plot thickened when it came to
public knowledge that the Information Commissioner has been refusing to reveal details
of the full extent of subsidies planned for Hinkley Point. Unsurprisingly, the
EC’s green light for Hinkley seems not to have been based on the regulations
but on politics. France has taken the UK by the hand and shown that if you have
the clout, the guile and the effrontery (in varying degrees) then rules become
largely a matter of “consumer” choice and of keeping up appearances in case the
hoi polloi (the smaller or more gullible countries) get ideas above their
station.If Hinkley Point goes ahead it
will not be because the Austro-German lawsuit has failed, nor because the EC
benignly looks away, nor even because the UK government wants it to happen.
French self-interest will be the deciding factor - a conclusion as revealing
about the EU as it is humiliating for the United Kingdom.

Aword
moreabout democracy. France, and
Germany among other EU countries have shown themselves willing to prioritise
national interests over formal EU strictures when the two are in conflict.
Their electorates would doubtless interpret this willingness as an example of democracy
in action.In the UK, by contrast, which
makes a noisy virtue of sticking to the rules whether made in Europe or
inherited as part of a sclerotic and unrepresentative
political system, democracy seems to be little more than a smug soundbite, a totem of
self-congratulation. The UK is not more democratic than our European
neighbours. It is considerably less so; and the lazy failure of our political
class to understand Europe, to grasp what it offers with both hands, to prioritise
the national interest within a framework that is far more accommodating than we
are led to believe, should induce us to question not whether we ought to be in
Europe but why any of our politicians deserve our vote.

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My aim here is to "broadcast" essays, commentary, books, poetry and other material that have not been published elsewhere.
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